TEST BANK for Auditing The Art and Science of Assurance Engagements, 16th Canadian Edition by Arens ,ultimate guide with guaranteed succes

,Auditing and Assurance Services, 16e kr kr kr kr




(Arens/Elder/Beasley) Chapter 2 The CPA
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Profession
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2.1 Learning Objective 2-1 kr kr




1) The legal right to perform audits is granted to a CPA firm by regulation of
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A) each state. kr




B) the Financial Accounting Standards Board (FASB).
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C) the American Institute of Certified Public Accountants (AICPA).
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D) the Auditing Standards
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Board. Answer: A
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Terms: Legal rights to perform k r kr kr kr




audits Diff: Moderate
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Objective: LO 2-1 k r kr




AACSB: Reflective thinking k r kr




2) Which of the following is not a characteristic of a small firm?
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A) Most small firms have fewer than 25 professionals.
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B) Small firms perform audits on small and not-for-profit businesses.
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C) Tax services are more important than auditing services to the small firm.
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D) Small firms are prohibited by the SEC from auditing publicly traded
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companies. Answer: D
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Terms: Characteristics of a small k r kr kr kr




firm Diff: Moderate
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Objective: LO 2-1 k r kr




AACSB: Reflective thinking k r kr




3) Sarbanes-Oxley and the Securities and Exchange Commission restrict auditors kr kr kr kr kr kr kr kr




from providing many consulting services to their publicly traded audit clients.
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Which of the following is true for auditors of publicly traded companies?
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I. They are restricted from providing consulting services to privately held companies.
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II. There is no restriction on providing consulting services to non-audit clients.
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A) I only kr




B) II only kr




C) I and II
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D) Neither I nor kr kr




II Answer: B
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Terms: Sarbanes-Oxley and Securities Exchange Commission
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restrictions Diff: Moderate
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Objective: LO 2-1 k r kr




AACSB: Reflective thinking k r kr




Topic: SOX
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,4) Which of the following does not describe a size category for a CPA firm?
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A) Big Four national firms kr kr kr




B) Big Four international firms
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C) local firms kr




D) national and regional kr kr




firms Answer: A
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Terms: Three categories for describing size of
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audit firms Diff: Easy
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Objective: LO 2-1 k r kr




AACSB: Reflective thinking k r kr




5) is one of the Big Four international CPA firms. kr kr kr kr kr kr kr kr




A) Deloitte
B) KPMG
C) Ernst & Young kr kr




D) All of the above are classified as Big Four international
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CPA firms. Answer: D
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Terms: Three categories for describing size of
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audit firms Diff: Moderate
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Objective: LO 2-1 k r kr




AACSB: Reflective thinking k r kr




6) In which type of service does the CPA assemble the financial statements but
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provide no assurance to third parties?
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A) audit
B) compilation
C) review
D) bookkeepi
ng Answer:
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B
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Terms:
Compilation
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Diff: Moderate
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Objective: LO
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2-1
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AACSB: Reflective thinking k r kr




7) In addition to attestation and assurance services, CPA firms provide other
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services to their clients. List three of these services.
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Answer: Other services performed by a CPA firm include:
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• accounting and bookkeeping services kr kr kr




• tax services kr




• management consulting and risk advisory kr kr kr kr

, services. Terms: Activities of CPA firms
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Diff: Moderate
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Objective: LO
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2-1
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AACSB: Reflective thinking
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